Calculating ratios.. Help needed...

[KrishMyth69]

Question 3: The following are the brief performance indicators of a company for three years.
Year I Year II Year III (000 omitted)
Sales 5000 5600 5700
Gross profit 500 550 600
Operating profit 100 110 120
Net profit before tax 150 160 170
Net profit after tax 120 130 140
Retained profit 60 75 70
Equity 500 500 500
Total assets 2500 2700 3000


Work out the following ratios for all the three years
1. Operating profit to sales
2. Retained profit to net profit after tax
3. Equity to sales
4. Net profit to equity

 

[Samir]

Tell us what you do not understand about the question and we'll try to help.

 

[KrishMyth69]

Thanks Samir. Are the following formulas are correct?


1. Operating profit to sales = Operating profit / Sales
2. Retained profit to net profit after tax = Retained profit / Net profit after tax
3. Equity to sales = Sales / (Equity + Retained Profit)
4. Net profit to equity = Net profit after tax / Equity + Retained Profit

 

[Samir]

Thanks Samir. Are the following formulas are correct?


1. Operating profit to sales = Operating profit / Sales
2. Retained profit to net profit after tax = Retained profit / Net profit after tax
3. Equity to sales = Sales / (Equity + Retained Profit)
4. Net profit to equity = Net profit after tax / Equity + Retained Profit

Those seem right to me if retained earnings are not already included in equity.